A hedge fund manager thinks he's found the perfect way to invest in Tesla

Chamath Palihapitiya, the founder of hedge fund Social Capital, thinks he's found the perfect way to invest in Tesla — 2022 convertible Tesla bonds.

He presented his thoughts at the Sohn Conference in New York City on Monday.

Now, Palihapitiya admitted that the company is controversial.

"There's always good, there's generally some bad, and then there's some ugly," he said. "The one thing we can all agree on is that these things are extremely capital intensive... at least twice the capital in the management case."

In other words, as the shorts have been saying, the company requires hordes and hordes of cash for its incredible ambitions.

"It's absolutely unmodelable," he said, to laughter from the crowd.

Palihapitiya went on to compare Tesla to where Apple was in 2007 when the iPhone was released.

"What we do know is that the early traction of Tesla is tracking very close to Apple," he said.

Here's why and why not:

Impossible to go back to a "horrendous" combustible after driving a Tesla.

Like Apple did with iPhone, Tesla is expanding the product scope by building batteries and more.

However, Tesla hasn't been able to "redefine the market" like the iPhone.

The iPhone, he said, didn't really take over until the third model. He sees the potential for that happening with Tesla's Model 3.

But of course, that also may not happen. The company may very well run out of steam.

There, is, however, a way to protect yourself from the downside while sharing in the upside — the 2022 Tesla convertible bonds. Palihapitiya sees them as a reasonable coupon that pays a reasonable conversion price.

With the 2022 bonds you're "guaranteed not to lose money as long as Tesla's worth $15 billion.... More importantly while our downside is protected, if this guy manages to pull it off, we get 95% of the upside."